Source: https://deftridge.com/guides/side-income-and-tax-basics/ Title: Side income and tax: the basics | Deftridge Summary: What contractors in the US and UK usually have to think about. General information, not tax advice. Written by Grace Huang, Director, Finance & Accounting. Money · **Updated November 3, 2026** # Side income and tax: the basics What contractors in the US and UK usually have to think about. General information, not tax advice. By [Grace Huang](https://deftridge.com/team/grace-huang/), Director, Finance & Accounting · Edited by [Helena Voss](https://deftridge.com/team/helena-voss/) · Published 1 November 2026 ## You are usually responsible for your own tax As an independent contractor you are normally not subject to payroll withholding. You report the income and pay tax and social contributions yourself, often in instalments. Rules differ by country and state. ## United States Self-employment tax is 15.3%: 12.4% Social Security plus 2.9% Medicare, due when net earnings from self-employment are $400 or more (tax year 2026). Source: [IRS](https://www.irs.gov/businesses/small-businesses-self-employed/self-employment-tax-social-security-and-medicare-taxes). ## United Kingdom For 2026 to 2027 self-employed Class 4 National Insurance is 6% on profits between £12,570 and £50,270 and 2% above. Source: [gov.uk](https://www.gov.uk/self-employed-national-insurance-rates). ## Other countries Canada, the EU member states and the others we cover have their own regimes. Ask a local accountant to size the amounts before you take a task. ## How much income we are talking about Five hours a week at a typical rate adds up to a real second income, which is why tax registration matters from the first month. The table uses the typical senior rate for a bookkeeper in four markets; your own role and level will differ. | Market | Rate per hour | A month at 5 h/week | A year at 5 h/week | | --- | --- | --- | --- | | US | $35 | $760 | $9,120 | | Canada | CA$45 | CA$980 | CA$11,760 | | UK | £23 | £500 | £6,000 | | Germany | €35 | €760 | €9,120 | Rules we have checked on official pages for tax year 2026: - Self-employment tax is 15.3%: 12.4% Social Security plus 2.9% Medicare; the employer-equivalent half is deductible in working out adjusted gross income. [Source](https://www.irs.gov/businesses/small-businesses-self-employed/self-employment-tax-social-security-and-medicare-taxes). - For 2026 the first $184,500 of combined wages, tips and net self-employment earnings is subject to the Social Security part. [Source](https://www.irs.gov/businesses/small-businesses-self-employed/self-employment-tax-social-security-and-medicare-taxes). - An additional 0.9% Medicare tax applies above $200,000 (single), $250,000 (married filing jointly) or $125,000 (married filing separately). [Source](https://www.irs.gov/businesses/small-businesses-self-employed/self-employment-tax-social-security-and-medicare-taxes). - Self-employment tax and Schedule SE are due when net earnings from self-employment were $400 or more. [Source](https://www.irs.gov/businesses/small-businesses-self-employed/self-employment-tax-social-security-and-medicare-taxes). - For tax year 2026 to 2027, self-employed Class 4 National Insurance is 6% on profits over £12,570 up to £50,270 and 2% on profits over £50,270. [Source](https://www.gov.uk/self-employed-national-insurance-rates). ## Questions Does Deftridge withhold tax? No. You receive the full rate and manage your own tax. Your recruiter can point you to the checklist for your country. ## Keep reading - [Check your contract before you take side work Four clauses decide whether side work is allowed, and how to read them.](https://deftridge.com/guides/check-your-contract-before-side-work/) - [How to price a task Start from the market wage, add the contractor premium and decide your floor.](https://deftridge.com/guides/how-to-price-a-task/) - [How to read a task brief Eight lines to check in a task brief before you say yes: outcome, load, tools, scope and acceptance.](https://deftridge.com/guides/how-to-read-a-task-brief/) - [Fractional, part time or freelance? Fractional, part time and freelance sound alike. Here is what each one means on Deftridge and which fits you.](https://deftridge.com/guides/fractional-vs-part-time/)